Neoliberalism and global capital mobility: a necessary reconsideration of textbook trade theory

Abstract

RESUMO: A teoria dos livros didáticos ignora os fluxos de capital: o comércio determina as taxas de câmbio e de especialização. São necessárias abordagens que levem em consideração os movimentos de capital adequadamente, e uma nova teoria da política econômica, incluindo medidas para proteger a economia real da volatilidade externa. O mecanismo de equilíbrio de livros didáticos não pode funcionar para definir as taxas de câmbio. Para que a teoria ortodoxa do comércio funcione é preciso impedir que os fluxos de capital destruam a sua própria base, causadas pelo FMI por decisões regulamentares erradas, penalizando a produção e o comércio. Uma teoria nova, baseada na economia real é proposta, uma agenda neoclássica de controle de fluxos de capital e da especulação. PAlAVRAS-ChAVE: teoria do comércio; especialização; movimentação de capitais; neoliberalismo; especulação.ABSTRACT: Textbook theory ignores capital flows: trade determines exchange rates and specialisation. Approaches taking the effects of capital movements adequately into account are needed, and a new theory of economic policy including measures to protect the real economy from external volatility. Equilibrating textbook mechanisms cannot work unless tradecaused surpluses and deficits set exchange rates. To allow orthodox trade theory to work one must hinder capital flows from destroying its very basis, which the IMF and wrong regulatory decisions have done, penalising production and trade. A new, real economy based theory is proposed, a Neoclassical agenda of controlling capital flows and speculation.KEywORDS: trade theory; specialisation; capital movements; neoliberalism; speculation. JEl Classification: F11; F13; F32; F40; G15.Once upon a time the exchange rate was basically determined by the movement of goods and to a lesser degree, services, at least in textbook trade theory. Although free capital movements -on a much lower scale than nowadays -existed for a * For valuable comments I am indebted to luiz Carlos Bresser-Pereira.

Friedrich List and Dutch Disease: two sides of the same coin?

“…Understandably so, as exchange rate changes can destroy any form of specialisation optimal under textbook trade theory (cf. Raffer 2015). Like Graham's Paradoxon such results are supressed.…”

“…There are indeed only few papers dealing with exchange rates and their developmental importance (for one exception especially stressing the importance of exchange rates whose fluctuations may destroy orthodox trading models cf. Raffer 2015). Normally only shifts due to demand and supply are analysed.…”